U.s. Automakers Report Record Sales In July

CHICAGO — Profits for GM, Ford and DamilerChrysler jumped because of their employee discount plans.

Thanks to employee pricing, the Big Three U.S. automakers on Tuesday reported July sales that were "beyond expectations."

All three will continue the offer for another month, with General Motors reversing a decision to end its program.

Officially, GM said it reversed itself to get rid of leftover 2005 vehicle inventory, but analysts suggest Ford and DaimlerChrysler's decision to extend their employee discount programs prompted GM to change course.

"July was one of the strongest months in industry history," said Paul Ballew, GM's executive director of global market and industry analysis.

"For the first time in history, sales exceeded 1.8 million units for the month, 80,000 more than in October 2001" when the zero-percent financing was in vogue after the September terrorist attacks. "For June and July, the industry delivered 3.5 million units, the highest ever for the two months," Ballew said.

But analysts voiced some concerns, the primary one being that the auto industry eventually would face payback -- a sharp drop in sales because consumers who would have bought 2005 models in August, September and October bought them at discount in June and July.

"When the industry sells about 250,000 more units in July than it normally does, you have to ask what part of that 250,000 came out of future sales?" said Gary Dilts, senior vice president of sales at the Chrysler Group in a conference call with the media. "No one can answer that question yet."

GM sales rose 20 percent in July, down, as expected, from the 41 percent increase in June when GM was the only automaker with employee pricing. Ford's sales jumped 35.5 percent and Chrysler sales rose 32 percent.

Ford said Monday that it will extend its employee pricing through Sept. 6, the same date GM settled on. Chrysler Group set no end date for its program. Ford includes some '06 models; GM and Chrysler don't. *